SBI Life Insurance OFS begins today, State Bank of India to divest 2% stake, check floor price

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Published: June 12, 2020 10:39 AM

India’s biggest public-sector lender, State Bank of India (SBI) has decided to reduce its stake in SBI Life Insurance Company by 2.10% through an Offer For Sale (OFS) beginning today

The issue will open on June 12 for non-retail investors first and on Monday, June 15 for retail and non-retail investors who chose to carry forward their un-alloted bids.

India’s biggest public-sector lender, State Bank of India (SBI) has decided to reduce its stake in SBI Life Insurance Company by 2.10% through an Offer For Sale (OFS) beginning today to achieve minimum public shareholding of 25%. At a floor price of Rs 725 per share, the OFS stands at a 2.24% discount to SBI Life’s closing price of Rs 741 apiece on Thursday. SBI Life Insurance is a joint venture between SBI and French financial services firm BNP Paribas Cardif. The divestment will see SBI sell up to 2.10 crore shares in the company on BSE and NSE.

The issue will open on June 12 for non-retail investors first and on Monday, June 15 for retail and non-retail investors who chose to carry forward their un-allotted bids. Investors under the retail category will only be allowed to bid for shares valuing not-more than Rs 2 lakh. SBI Life Insurance informed the bourses that no discount shall be offered to retail investors but 10% of the shares on sale will be reserved for the category. 25% of the shares on sale have also been reserved for mutual funds and insurance companies. Along with this, non-institutional investors have been asked to deposit 100% of the bid value in cash up-front with the clearing corporation at the time of placing the bids while institutional investors have an option to bid without an up-front payment.

Currently SBI owns 57.59 crore shares of SBI Life Insurance Company that translate to 57.60% of the total number of shares. BNP Paribas Cardif, on the other hand, owns 5.2 crore shares or 5.20% of the total shares of which almost all are in a lock-in. Shares of SBI Life Insurance Company were trading 2% higher in an otherwise bearish market that was deep down in red on Friday. Shares of the insurance firm tanked over 45% in the market bloodbath earlier in March, however, since then the stock has surged to regain half the losses. Meanwhile the promoter, SBI has seen shares tank 48% year-to-date with little to no recovery in the share price since the March fall.

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